RFE/RL NEWSLINE Vol. 2, No. 116 Part I, 18 June 1998

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RFE/RL NEWSLINE Vol. 2, No. 116 Part I, 18 June 1998
A daily report of developments in Eastern and Southeastern
Europe, Russia, the Caucasus and Central Asia prepared by
the staff of Radio Free Europe/Radio Liberty.
This is Part I, a compilation of news concerning Russia,
Transcaucasia and Central Asia. Part II covers Central,
Eastern, and Southeastern Europe and is distributed
simultaneously as a second document. Back issues of RFE/RL
Newsline and the OMRI Daily Digest are online at RFE/RL's
Web site: http://www.rferl.org/newsline
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Headlines, Part I
* YELTSIN SAYS CHUBAIS'S APPOINTMENT IS 'TEMPORARY'
* MARKETS RISE ON FOREIGN BUYING
* ARMENIAN FOREIGN MINISTER CRITICIZES BAKU'S
'INTRANSIGENCE'
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RUSSIA
YELTSIN SAYS CHUBAIS'S APPOINTMENT IS 'TEMPORARY.' President
Boris Yeltsin on 18 June said his appointment the previous
day of Unified Energy System chief executive Anatolii
Chubais as presidential envoy to international financial
institutions is a "temporary" measure, Russian news agencies
reported. Yeltsin cautioned journalists against drawing
"unnatural conclusions" from the appointment, Interfax
reported. Chubais will keep his job at the electricity
monopoly. In a speech to the second annual St. Petersburg
Economic Forum on 17 June, Prime Minister Sergei Kirienko
warned that the government's "anti-crisis program" will be
"tough" and "unpopular," RFE/RL's correspondent in St.
Petersburg reported. He did not disclose details about the
program but said its implementation will require "courage
and political will." Some observers believe that in his new
position, Chubais will become a scapegoat for unpopular
government policies, an RFE/RL correspondent in Moscow
reported on 18 June. LB
'THIRD COMING' OF CHUBAIS DRAWS MIXED REACTION. The Russian
media has viewed Chubais's appointment (his "third coming"
in the words of "Kommersant-Daily") as an attempt to
reassure foreign investors who have fled Russian markets
during the last six weeks. Speaking to journalists in St.
Petersburg on 17 June, State Duma Speaker Gennadii Seleznev
charged that international financial institutions themselves
initiated the appointment, Interfax reported. Seleznev
expressed regret that "Western financiers continue to regard
Chubais as a panacea." Duma First Deputy Speaker Vladimir
Ryzhkov of Our Home Is Russia argued that Chubais's
appointment will worsen the already difficult relations
between the government and the Duma. He noted that the
government needs the parliament's cooperation in order to
adopt key economic legislation. Duma deputy Sergei Ivanenko
of Yabloko viewed the latest appointment as evidence that
"the government is not going to change its old habits" of
cultivating crony capitalism. LB
BEREZOVSKII ON CHUBAIS, OLIGARCHS' CONTACTS WITH GOVERNMENT.
CIS Executive Secretary Boris Berezovskii, who fought for
months to have Chubais removed from the government, told
journalists on 17 June that he supported naming Chubais as
liaison with international financial groups, adding that the
appointment was partly his idea, RFE/RL's correspondent in
St. Petersburg reported. Commenting on the 16 June meeting
between Prime Minister Kirienko and top Russian "oligarchs,"
Berezovskii told Interfax that the meetings are a positive
"sign of consolidation of reformist forces...for overcoming
the [economic] crisis." He argued that the authorities have
no other base of "realistic support." ITAR-TASS on 18 June
quoted Berezovskii as saying that "the Russian business
elite is united" and understands that business groups
"cannot afford not to coordinate their activities" during
the crisis. Although Berezovskii claims no longer to be
directly involved in business, he reportedly attended
Kirienko's meeting with the "oligarchs." LB
MARKETS RISE ON FOREIGN BUYING. Share values on the Russian
stock market rose 5-10 percent in early trading on 18 June
amid buying by foreign traders, ITAR-TASS reported. The bond
market also posted gains, as yields on government treasury
bills fell by some 10 percentage points to 55-57 percent. On
17 June, the Finance Ministry canceled two auctions for six-
month and 11-month treasury bills, which were to have raised
a combined total of 14 billion rubles ($2.3 billion),
Interfax reported. According to Central Bank First Deputy
Chairman Sergei Aleksashenko, the Finance Ministry did not
want to raise money through treasury bills at yields of 65
percent to 68 percent. The 'Moscow Times" reported on 18
June that the cancellation of the auctions "fueled
speculation in the market that the government has found
other sources of funds" to redeem more than $1 billion in
maturing treasury bills. LB
FINANCE MINISTER SAYS NO GROWTH THIS YEAR. Addressing a
cabinet session on 18 June, Mikhail Zadornov predicted that
Russian will not achieve economic growth this year, ITAR-
TASS reported. The Economics Ministry is forecasting 1998
GDP at 0.5 percent below to 0.5 percent above the previous
year's figure. Zadornov also said Russia will post a budget
deficit of some 14 billion rubles ($2.3 billion) in 1998,
with revenues falling 5-7 billion rubles short of budget
targets. Wage arrears to state employees total 6 billion to
7 billion rubles, of which the Finance Ministry owes 3
billion rubles, Zadornov noted. In a speech to the St.
Petersburg Economic Forum on 17 June, Central Bank Chairman
Sergei Dubinin said one-third of budget expenditures go
toward debt servicing. LB
DUMA WANTS SUPREME COURT TO HAVE SAY ON PRESIDENT'S HEALTH.
The Duma on 17 June passed in the first reading an amendment
to the civil procedural code that would empower the Supreme
Court to rule on "the ability or persistent inability of the
president for health reasons to carry out his functions,"
ITAR-TASS reported. Article 92 of the constitution
stipulates that the president's term ends early in the event
of "persistent inability for health reasons" to carry out
his duties, but the constitution does not establish a
mechanism for evaluating the president's health. Aleksandr
Kotenkov, Yeltsin's representative in the Duma, argued that
the proposed amendment is unconstitutional. LB
COMMUNIST DEPUTY SUSPECTS YELTSIN HAS A DOUBLE. Duma deputy
Aleksandr Salii of the Communist faction has asked the
Prosecutor-General's Office to investigate the possibility
that a double has been standing in for Yeltsin since the
president's heart surgery in November 1996, "Moskovskii
komsomolets" reported on 18 June. Rumors that a surgically-
altered double has taken Yeltsin's place have occasionally
surfaced in the opposition press during the last two years.
Salii told "Moskovskii komsomolets" that analysis of some
1,500 photographs shows that the president's appearance
changed after the 1996 presidential election. He also
charged that the "new Yeltsin" frequently shows his hand
with two missing fingers, whereas the president used to try
to conceal that hand from public view. LB
DUMA PRAISES RUSSIAN DIPLOMACY ON KOSOVA. The Duma on 17
June passed by 332 to three votes a statement calling for a
peaceful settlement of the situation in Kosova "on the basis
of respect for the sovereignty and territorial integrity of
the Yugoslav Federal Republic and observing the rights of
the [ethnic] Albanian population," Russian news agencies
reported. The statement praised the recent meeting between
President Yeltsin and his Yugoslav counterpart, Slobodan
Milosevic, and expressed "full support" for Russian
diplomatic efforts. At the same time, the Duma criticized
the "obviously biased policy of several Western countries"
on the Kosova issue, adding that "the language of sanctions
and threats of using force against Belgrade in effect
encourage separatism" (see also Part II). LB
KIRIENKO SAYS GOVERNMENT WON'T REACT TO MINERS' PICKET.
Prime Minister Kirienko told journalists on 17 June that the
government will not take any steps in response to the
ongoing picket of government headquarters by coal miners,
ITAR-TASS reported. The miners, who came to Moscow from
various regions of Russia, have been demonstrating outside
the White House since 11 June. Kirienko noted that the
government is prepared to discuss economic problems with the
miners, but not political demands. A participant in the
picket told RFE/RL's Moscow bureau on 16 June that the
miners will not drop their demand for the resignations of
Yeltsin and the government. Another miner who has joined the
demonstration addressed the Duma on 17 June, after which
deputies passed an appeal urging Yeltsin to "put the coal
industry in order." LB
GAZPROM, TAX SERVICE CLASH OVER PROPERTY SEIZURES...
Regional officials of the State Tax Service have begun
seizing assets and bank accounts belonging to subsidiaries
of the gas monopoly Gazprom, "Kommersant-Daily" reported on
18 June. On the order of its director, Boris Fedorov, the
State Tax Service recently warned more than 100,000
enterprises that their assets may be seized if they do not
pay their tax debts by 1 July. The Gazprom subsidiaries
Orenburggazprom and Uraltransgaz are among the first
enterprises affected. According to "Kommersant-Daily,"
Fedorov is seeking to annul the agreement on tax payments
signed by his predecessor, Aleksandr Pochinok, with Gazprom.
The company's press service on 17 June slammed the "forcible
extraction of debts" by the tax authorities. The same day,
the Duma passed a resolution warning that the tax service's
methods will harm the domestic economy and are "aimed at
destroying" the country's gas supply system. LB
...AS MONOPOLY SEEKS REDUCTIONS IN VAT AND EXCISE DUTIES.
Gazprom head Rem Vyakhirev on 13 June warned that the
current value-added tax of 22 percent and excise duties of
30 percent threaten to "bury" Russia's gas exports to
Europe, Russian news agencies reported. Vyakhirev said
Gazprom will stop signing new export contracts unless the
government reduces VAT and excise rates. Gazprom lost some
of its political clout when its former head Viktor
Chernomyrdin lost his job as prime minister in March. Last
month, the government submitted to the parliament a draft
law that would levy excise duties on gas at the time of
delivery rather than when Gazprom collects payment. Such a
law would be a disaster for the gas monopoly, which "only
collects between 10 and 15 percent of its revenues from gas
sales in cash," according to the "Financial Times" on 15
June. LB
THIRD SUSPECT ARRESTED IN JOURNALIST'S MURDER. Aleksandr
Zvyagintsev, an aide to Prosecutor-General Yurii Skuratov,
announced on 17 June that police have arrested a third man
in connection with the 7 June murder of "Sovetskaya Kalmykia
Segodnya" editor Larisa Yudina, Russian news agencies
reported. He identified the suspect as V. Shanukov but did
not provide other details. The two men previously arrested
for Yudina's murder both have ties to Kalmykian President
Kirsan Ilyumzhinov. Meanwhile, the Union of Journalists on
18 June announced that it will fight to ensure that
"Sovetskaya Kalmykia Segodnya" can be published and
distributed freely in the republic, ITAR-TASS reported. A
statement issued by the union called on the State Press
Committee to become one of the newspaper's "co-founders" in
order to help provide for its regular publication. LB
SUSPECT IN CORRUPTION CASE ARRIVES IN RUSSIA. Andrei
Kozlenok, the main suspect in a high-level corruption case,
was flown from Athens to Moscow on 17 June, Russian news
agencies reported. Kozlenok is to be questioned on 18 June
and charged with embezzlement in connection with a scheme to
sell $180 million in gemstones. He fought his extradition
from Greece for five months, saying his life would be in
danger in Russia. Kozlenok's former "right-hand man,"
another key suspect in the case, was found hanging in his
Moscow jail cell in February. LB
ANOTHER AIDE TO AN LDPR DEPUTY GUNNED DOWN. Igor Klyachko,
an aide to a Duma deputy from the Liberal Democratic Party
of Russia, was found shot dead in St. Petersburg on 17 June,
ITAR-TASS reported. A revolver, a gun permit, and several
thousand U.S. dollars were found on Klyachko. According to
ITAR-TASS, he was the sixth aide to a Duma deputy from
Vladimir Zhirinovsky's party to be killed since November
1996. LB
AMMUNITION BLAZE WREAKS HAVOC IN SVERDLOVSK OBLAST. Fourteen
soldiers have died, 17 have been injured, and more are
reported missing after an explosion at a ammunition storage
compound near Yekaterinburg (Sverdlovsk Oblast), Interfax
reported on 18 June. The previous day, lightning set fire to
the compound, setting off massive explosions and spreading
across 200 hectares into surrounding forests. The head of
administration of Berezovksii, the city closest to the
compound, told ITAR-TASS on 18 June that 1,070 local
residents were evacuated, while Interfax put the figure
at1,500-2,500. BT
GREENPEACE DEMANDS INVESTIGATION INTO WATER-POLLUTION CASE.
Greenpeace of Russia has sent a letter to the Prosecutor-
General's Office demanding an investigation into an
environmental catastrophe in Krasnoyarsk Krai, Interfax
reported on 17 June. Dumping of mercury waste into the
Bratskoe water reservoir (on the Angara River) by the local
enterprise Usolyekhimprom has affected 500,000 local
residents, Greenpeace of Russia said in a 17 June press
release. The press release cites increased cancer rates as
well as cases of respiratory, vascular, and urinary system
diseases in nearby settlements. Mercury content in hair
samples from local children allegedly exceed the regional
average by 800 percent. Owing to faulty processing, the
enterprise dumps 2.5 tons of mercury waste into the
reservoir each month, Greenpeace claimed. BT
TRANSCAUCASUS AND CENTRAL ASIA
ARMENIAN FOREIGN MINISTER CRITICIZES BAKU'S 'INTRANSIGENCE.'
Speaking at a press conference in Yerevan on 17 June, Vartan
Oskanian said the Karabakh peace process is in effect
deadlocked because Azerbaijan opposes changes in the
Karabakh peace plan proposed by the OSCE Minsk Group,
RFE/RL's Yerevan bureau reported. Oskanian said that Armenia
has made a major concession by agreeing to less than total
independence for the unrecognized Nagorno-Karabakh Republic
and that Baku should reciprocate by abandoning its
insistence on granting Karabakh only an autonomous status
within Azerbaijan. Oskanian said that if the present
deadlock persists for another two years, Baku will have the
opportunity to strengthen its military capacity and Yerevan
will be forced to strengthen its political and military
commitment to the security of the Karabakh Armenian
population. He added that Yerevan will consider alternative
approaches to resolving the deadlock, including
reunification with Karabakh. LF
GEORGIAN, RUSSIAN OFFICIALS DISCUSS ABKHAZIA. Georgian
President Eduard Shevardnadze held talks in Tbilisi on 17
June with Russian special envoy for Abkhazia Gennadii
Ilichev and General Sergei Korobko, the commander of the
Russian peacekeeping forces deployed in Abkhazia's Gali
Raion under the aegis of the CIS, Caucasus Press reported.
Shevardnadze accused the Russian peacekeepers of failing to
prevent the Abkhaz Interior Ministry forces from bringing
heavy artillery into the conflict zone, RFE/RL's Tbilisi
bureau reported. But Korobko pointed out that the
peacekeepers' mandate does not empower them to intervene in
hostilities. Ilichev and Shevardnadze agreed on the need to
expedite the return to their homes of ethnic Georgians
constrained to flee during last month's fighting. Also on 17
June, the U.S., French, British, German, and Russian
ambassadors in Tbilisi were in Novy Afon for talks with
Abkhaz President Vladislav Ardzinba. LF
GEORGIAN PRESIDENT SAYS HE HAS FAITH IN RUSSIAN MEDIATION.
Shevardnadze told a press conference in Tbilisi the same day
that "Russia can and must" speed up the process of resolving
conflicts in the Transcaucasus, ITAR-TASS reported. Arguing
that "it is difficult to imagine tranquillity in the North
Caucasus without a stable South [Caucasus]," Shevardnadze
said that he does not believe the Caucasus will become a
center of confrontation between Russia and the West, despite
their conflicting interests in the region. LF
AZERBAIJAN CONTINUES TO PRESSURE OPPOSITION. Police searched
the editorial offices of the opposition newspaper "Chag" in
the evening of 16 June and confiscated computer equipment
and documents, Turan reported. The following day, police
also searched the apartment of Elchin Pashaev, secretary of
the United Azerbaijan Union, which is campaigning for the
unification of the Azerbaijan Republic and Iranian
Azerbaijan. The Azerbaijan Popular Front Party has issued a
statement threatening protest actions if the authorities
continue arbitrary repression of the opposition. Of the two
aides to APFP chairman Abulfaz Elchibey who were arrested on
14 June (see "RFE/RL Newsline," 17 June 1998), one has been
charged with illegal possession of weapons and the other
with refusing to obey police orders. LF
AZERBAIJANI OPPOSITION LEADERS ANNOUNCE ELECTION BOYCOTT.
Five prospective opposition presidential candidates--Abulfaz
Elchibey (APFP), Lala-Shovket Gadjieva (Liberal Party of
Azerbaijan), Isa Gambar (Musavat Party), Ilyas Ismailov
(Democratic Party of Azerbaijan), and Rasul Guliev (non-
affiliated)--issued a statement on 17 June arguing that
their participation in a poll held under "reactionary laws"
would be tantamount to legitimizing a dictatorial regime and
tacitly condoning repression, Turan reported. They affirmed
their intention to boycott the presidential election
scheduled for October. They also warned that "sooner or
later, all dictatorial regimes end with social upheaval." LF
AZERBAIJANI OFFICIAL CONDEMNS TURKMEN CASPIAN TENDER.
Azerbaijani presidential adviser Vafa Gulu-zade told
journalists on 17 June that no foreign companies should
start exploiting the Kyapaz/Serdar Caspian oil field until
the dispute between Azerbaijan and Turkmenistan over
ownership of the oil field has been resolved, Interfax
reported. Turkmenistan the previous day announced the
results of a tender in which Mobil acquired the rights to
that deposit, but Gulu-zade said Mobil's representation in
Baku reassured the Azerbaijani leadership that it will not
begin work on Kyapaz until the ownership dispute is
resolved. Also on 17 June, a spokesperson for the Azerbaijan
International Operating Company engaged in exploiting three
offshore Caspian oil fields said the company is confident
that Russia's Transneft pipeline company can ensure
uninterrupted shipments of Azerbaijani oil through the Baku-
Grozny-Novorossiisk export pipeline. The Chechen leadership
threatened to halt the oil flow if Moscow failed to meet its
outstanding financial commitments to Chechnya. LF
ANOTHER COMMITTEE FOUNDED TO INVESTIGATE KYRGYZ CYANIDE
SPILL. Representatives of several Kyrgyz ecological and
human rights organizations have founded a Committee to
Protect the Environment, RFE/RL's Bishkek bureau reported on
17 June. The committee intends to conduct an independent
investigation into the 20 May accident in which a lorry
carrying 20 tons of sodium cyanide plunged into the Barskoon
River. Kyrgyz parliamentary deputies and intellectuals
founded a Committee to Protect Lake Issyk-Kul (into which
the Barskoon River flows) on 22 May, and the parliament on
13 June voted to create an international commission to
investigate the causes of the accident (see "RFE/RL
Newsline," 15 June 1998). A State Customs Committee
spokesman on 17 June said that the committee will sue the
Kyrgyz-Canadian gold-mining joint venture whose lorry was
involved in the accident for $1.44 million in unpaid customs
duties. LF
TOP TAJIK SECURITY OFFICIAL SLAIN. Usmon Khodjiev, the
deputy commander of the Defense Ministry's recently
established special unit for protecting the UN observer
force in Tajikistan, was found murdered in Dushanbe on 17
June, Interfax reported. Khadjiev was a former opposition
field commander. Other former opposition fighters have
issued a statement condemning the killing. LF
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